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1) Capacity decisions are usually one-time decisions; once they have been made, we
know the limits of our operations.
2) Cost of inspectors, testing, test equipment, and labs are examples of prevention costs.
3) Matrix organizations transfer control of workers to project managers for the duration
of the project.
4) The operations manager has primary responsibility for making operations system
design decisions, such as system capacity and location of facilities.
5) Waiting line analysis can be useful for capacity design, especially for service
systems.
6) Bounded rationality refers to the limits imposed on decision making because of
costs, human abilities, time, technology, and/or availability of information.
7) A smoothing constant of .1 will cause an exponential smoothing forecast to react
more quickly to a sudden change than a smoothing constant value of .3.
8) The Pareto phenomenon is one of the most important and pervasive concepts that can
be applied at all levels of management.
9) When new products or services are introduced, focus forecasting models are an
attractive option.
10) Service operations require additional inventory because of the unpredictability of
consumer demand.
11) Statistical process control focuses on the acceptability of process output.
12) Interest, insurance, and opportunity costs are all associated with holding costs.
13) A house of quality is achieved when no department in a single location has more
than 15 percent rejects.
14) Ensuring that the constraining resource is used to its maximum is an example of
constraint:
A.elevation.
B.subordination.
C.identification.
D.elimination.
E.exploitation.
15) Which of the following is not characteristic of good risk management?
A.estimating the likelihood of chance events occurring
B.planning to eliminate chance events
C.identifying potential chance events
D.formulating contingency plans for chance events
E.analyzing the consequences of chance events
16) Which of the following circumstances would be least likely to lead to a need for a
new location?
A.shifting of markets
B.depletion of basic inputs
C.growth in demand that is leading to greater utilization of existing capacity
D.the need to expand into new markets
E.the opportunity to take advantage of globalization trends
17) In a stopwatch time study, the average time it takes a given worker to perform a
task a certain number of times is the:
A.observed time.
B.normal time.
C.standard time.
D.allowance time.
18) A clothing manufacturer produces clothing in five locations in the United States. In
a move to vertical integration, the company is planning a new fabric production plant
that will supply fabric to all five clothing plants. The clothing plants have been located
on a coordinate system as follows:
If the amount of fabric shipped to each plant is equal, what is the optimal location for
the fabric plant?
A.5, 5
B.6, 4
C.4, 6
D.6, 2
E.5, 4
19) Which of the following relationships must always be incorrect?
A.Tolerances > process variability > control limits
B.Process variability > tolerances > control limits
C.Tolerances > control limits > process variability
D.Process variability > control limits > tolerances
E.Process variability < tolerances < control limits
20) Consider the following decision scenario:
*PV for profits ($000)
If yes and no are equally likely, which alternative has the largest expected monetary
value?
A.small.
B.medium.
C.med.-large.
D. large.
E. ex-large.
21) Which of the following is not true for the economic production quantity model?
A.Usage rate is constant.
B.Production rate exceeds usage rate.
C.Run size exceeds maximum inventory.
D.There are no ordering or setup costs.
E.Average inventory is one-half maximum inventory.
22) ___________ is generally used to facilitate an organization strategy that emphasizes
low cost.
A.Speed to market
B.Flexibility
C.Customization
D.Sustainability
E.Standardization
23) The Operations Manager for Shadyside Savings & Loan orders cash from her home
office for her very popular "BIG BUCKS" automated teller machine, which only
dispenses $100 bills. She estimates that this machine dispenses an average of 12,500
bills per month, and that carrying a bill in inventory costs 10 percent of its value
annually. She knows that each order for these bills costs $300 for clerical and armored
car delivery costs, and that order lead time is six days. Assuming a 30-day month, at
what point should bills be reordered?
A.0 bills remaining
B.417 bills remaining
C.2,500 bills remaining
D.10,000 bills remaining
E.12,500 bills remaining
24) In the use of closeness ratings for process layouts, the code U means the closeness
between two departments is:
A.(U)nknown.
B.(U)nusually important.
C.of (U)sual importance.
D.(U)nimportant.
E.(U)ndesirable.
25) The Deming Prize was established by the:
A.American Statistical Association.
B.Japanese.
C.North American Free Trade Association.
D.American Quality Society.
E.World Trade Organization.
26) Which of the following is not an assumption of the transportation model?
A.Actual supply and demand must be equal.
B.Shipping costs per unit are constant per unit.
C.Items to be shipped are homogeneous.
D.There is only one transportation route between each source and destination.
E.There is only one transportation mode between each source and destination.
27) Suppose a firm has decided to break its departments down into smaller units. While
this likely will help with __________ issues, it raises the possibility that poor decisions
will result due to __________.
A.economies of scope; suboptimization
B.economies of scale; risk aversion
C.span of control; suboptimization
D.economies of scope; risk aversion
E.economies of scale; economies of scope
28) Which of the following is not one of the six key decisions in project management?
(I) Selecting the project team
(II) Deciding on the project manager's title
(III) Managing and controlling project resources
(IV) Deciding which projects to implement
(V) Selecting the project manager
A.I
B.II
C.III
D.IV
E.V
29) Suppose we have a lot of several thousand units of a finished good. If n = 20 and c
= 2, what is the probability that, if this lot were 5 percent defective, it would be rejected
and completely inspected prior to shipment? 10 percent defective? 15 percent? 20
percent?
30) Given the following process control data for a normally distributed quality variable
(three samples of size four each):
If the process is known to have a mean of 15 and a standard deviation of 3, what is the
alpha risk (probability of Type I error) for upper and lower control limits of 16.5 and
13.5 respectively? 18 and 12? 19.5 and 10.5?
31) A town's department of public works is concerned about adverse public reaction to a
sewer project that is currently in progress. Because of this, the commissioner of public
works has authorized a weekly survey to be conducted of town residents. Each week, a
sample of 100 residents is questioned on their feelings about the project. The results to
date are shown below. Analyze these data using control charts that would provide for a
5 percent risk of Type I error.
32)
33) Given the following process layout data for locating four departments (A, B, C, and
D) in four areas (1, 2, 3, and 4):
If transportation costs are $.25 per load per foot moved, what are total monthly costs for
an optimum layout?
34) Which of the following could not be a linear programming problem constraint?
35) The Corner Newsstand has demand for a certain weekly magazine that can be
approximated by a Poisson distribution with a mean of 9.0. Magazines are purchased
for $1.50. If unsold copies must be destroyed and copies sell for $4.00 each, find the
optimum stocking level.
